Discontinuity & Opportunity in a Hyper-Connected World

[This paper was originally published for a government report on discontinuity & change management.]

We live in a time of large-scale, non-linear change driven by the twin engines of globalization and hyper-connectivity. Change is, of course, constant but we now have such extreme visibility into the farthest corners of the world that the amplitude of change appears much greater than ever before. Many of us are, for the first time, globally connected and wired to real-time data streams that carry information and emotion across the world instantaneously. When we look through this lens of hypermedia we are confronted by fast-moving, asymmetric complexity that seems to be slipping out of control. The landscape is moving more quickly than we are able to respond. This is deeply challenging to our sense of security.

As Americans, we face a highly multipolar world. We feel the decline of U.S. exceptionalism and the attendant existential crisis of this realization; the ongoing global financial malaise and the emerging debt crisis threatening to break apart the European Union; the rise of China as a dominant world power and the implicit criticism of democracy that comes from its economic success; and the evolution of Islam as an explicit criticism of western prosperity. We are realizing the massive power of finance & energy cartels while struggling with ultraviolent drug cartels. We feel the impacts of domestic unemployment amidst weekly reports of record corporate profits. Capital is moving away from mature western markets for the young labor pools of the developing world. Fund managers are betting more on decline than investing in growth. There is a growing sense that western governance is failing in its charter to effectively manage the prosperity & security of its citizenry, and that selfishness, partisanship, and corruption have undermined the political process.

In the United States there is arguably a crisis of confidence in governance. We face extreme partisanship among policy makers and their apparent inability to effectively govern on domestic issues. Congress has a 20% approval rating. 73% of Americans believe the country is moving in the wrong direction. On domestic issues, the popular narrative of U.S. governance is one of bickering, incompetence, and failure.

So if there is a crisis of confidence, is there an actual crisis in governance? Recently the debt Supercommittee failed to agree on a solution for the deficit. This past July, the largely-manufactured budgetary impasse shook confidence in U.S. governance contributing directly to the S&P downgrade of our hallowed AAA credit rating. To quote the S&P report, the downgrade “reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges”. Even closer to home, the American Society of Civil Engineers recently reviewed U.S. infrastructure with a grade of “D” stating that it would take $2.2 trillion over the next 5 years to bring our roads, bridges, railways, water and energy systems, and waste treatment capacity up to 1st world standards. These are the fundamental needs required to keep a country functional & efficient.

Looking at recent statistics, the U.S. Commerce Department charts wages & salaries at only 44% of GDP – the lowest since 1929. Corporate profits, on the other hand, now contribute 10% of GDP – the highest on record since that auspicious year, 1929. The U.S. Bureau of Labor Statistics estimates unemployment at 9% though real measures of unemployment that include the under-employed and those who have given up looking for work are estimated closer to 16%. Among young adults age 16-24, 50% are without work – the highest number on record since 1948. The majority of unemployed no longer receive state benefits. Tens of thousands of service members are returning to joblessness & homelessness. The 2010 U.S. Census Bureau estimates that 46 million people are living in poverty – 15% of the nation. This number has been increasing annually for the past 3 years. These trends are undermining the legitimacy of the US government both at home and abroad, and contributing to the social unrest sensationally illustrated by the rise of both the Tea Party and Occupy Wall Street movements.

Typically, when we observe these statistical trends in other countries we see a growing segment of the populace more exposed to gang indoctrination, co-option by religious fundamentalism, and coercion by home-brewed militias. This unfortunate reality is not lost on policy makers, as telegraphed most recently by Congressional attempts to reconfigure the legislative landscape of the Homeland as a domestic battleground.

While national statistics are indeed worrisome, the situation at the local & regional level is more varied and offers some hope. There is a shift towards state’s rights as illustrated by the more libertarian aspects of the Tea Party and the GOP narrative against so-called big government, but also in many state legislatures on both sides of the aisle. While often ideologically driven, this shift towards state governance is a response to the limitations of central management across such a large and complex territory as the United States. Perhaps more interestingly, we see a shift to municipal power as urban populations swell and major cities take ownership of their roles as economic engines. Mayors are gathering more influence over state and federal policy, and are making more lucrative partnerships with global allies.

Yet, there are huge budgetary challenges for both states and municipalities, with states often pushing their own budgetary problems down to the county & city level. There is even talk of an emerging municipal debt bubble as cities issue more bond debt to cover their existing debt costs. The U.S. just witnessed the largest municipal bankruptcy in history when Jefferson County, Alabama, failed to cover its sewage bonds. This is the downward cycle of U.S. infrastructure & budgetary mis-management laid bare.

The picture of local and regional governance is a patchwork of attempts (successes and failures) to address the many challenges confronting us locally and handed down from state and federal institutions. As higher-order governors lose legitimacy, states & regions will work to sidestep their authority and to innovate around budgetary shortfalls and non-local obstacles. Progressive states agitate for marijuana legalization and same-sex marriage, conservative states assail big government and immigration, southwestern border states are dealing with the spill-over from Mexico’s narcowar, and many regions across the country are absorbing diverse and extreme climate impacts potentially driving food production, water supplies, and population movements. So while large, productive cities are generally seeing more cohesion there is a significant risk of increased balkanization across regions and states.

U.S. governance is clearly challenged on many domestic fronts. In operational terms, we’re falling short. Governing institutions are too big and too slow to respond to such accelerated change. If we’re failing to manage the present, how can we prepare for the future? There is too much complexity to effectively predict change and yet there’s too much institutional friction to adequately invest in broad resilience. This combination poses tremendous risks to domestic security. The snapshot of social unrest in America arises from two primary drivers: the fear of U.S. decline and the sense that Democracy is no longer working (represented by the Tea Party and OWS movements, respectively). Both are rooted in a lack of jobs, diminishing access to prosperity, and growing insecurity in the face of poorly managed discontinuities. When government fails to meet it’s charter, it loses legitimacy. When conventional channels for change are closed, the gap widens between governors and the governed.

For better and for worse, a lot of innovation happens in the gaps. There is innovation in governance itself, as in the Gov 2.0 & OpenGov initiatives to standardize operational data across organizations, to publicize the data, and to invite the public to work with the data and develop 3rp party applications. Deputizing the crowd to help with governance can offer tremendous opportunities for innovation, as exemplified by tools such as Oakland Crimespotting and the Everyblock platform. The citizenry is becoming more digital and addressable with direct polling, crowdsourcing, and experiments in electronic voting. Transparency initiatives, such as the Sunlight Foundation, build web platforms to track and reveal the influence of money in politics. The growth in mobile/social/location platforms empowers tremendous opportunities in civic innovation, as does the emergence of embedded instrumentation in the built environment. Tech collectives and hacker spaces, experiments in local and digital currencies, slow food and Buy Local movements, increased community volunteerism and more public-private partnerships – all of these examples build local resilience and enable communities to take care of themselves.

Many of these efforts follow open source models that enable fast innovation and iteration across diverse non-local nodes, avoiding hierarchies and direct leadership in favor of feedback loops and emergent self-governance. These models gained popularity with the open source software movement but have since expanded to include innovation in open hardware and fabrication, science and robotics, economics (there is an estimated $10 trillion informal economy growing in the gaps globally), and political movements. Open source templates have enabled new models of power such as Occupy Wall Street and Anonymous, many aspects of the Iraqi insurgency, and the dangerous ecosystem of adaptation and innovation found in the IED marketplaces of Iraq and Afghanistan. The ability to maintain such open source models of organization has been radically empowered by mobile telephony, SMS, and social media. The ability to globally broadcast, communicate and collaborate has enabled a new breed of citizen reporting pushed out through platforms like You Tube and Twitter. Rapid SMS communication across mobile devices enables fast stigmergic coordination that can mobilize people en masses with a moment’s notice. The Green Revolution in Tehran, the Arab Spring, and the periodic support calls sent out by OWS groups are all examples of how borderless, frictionless hyper-connectivity empowers a patchwork of active tribes, locally and virtually.

Gaps in governance empower innovators and competitors alike. Actors exploit the gaps and seek to influence or undermine governance in order to open more gaps. Super-empowered individuals like Bill Gates and Eric Schmidt work to influence conventional channels of policy-making while restructuring the regulatory landscape to better enable their businesses. Activist billionaires like Warren Buffet, George Soros, and Sir Richard Branson use their weight and influence to change world affairs, as do libertarians like Peter Thiel and anarcho-capitalists like the Koch brothers. Some super-empowered actors are feral and may not appear to be powerful yet manage to inflict exceptional discontinuities on their targets. Arms dealer, Victor Bout, has been a significant driver of unrest in Africa. The head of the Sinaloan cartel, Joaquin Guzman, has helped deconstruct Mexican governance into a lawless war zone. Henry Okah, the leader of MEND in Nigeria, used a small group of lo-tech saboteurs to target critical pipeline infrastructure reducing crude output by 50% and costing western oil interests billions in production revenue. Cartels and criminal networks operate on international scales moving billions of dollars to influence authorities and outwit enforcers. Tech-enabled sociopolitical collectives like Anonymous and Wikileaks deputize themselves as moral enforcers, exposing secret agendas and arbitrating punishment. These actors walk the same stage as multinational corporations and NGO’s that have no built-in allegiance to the United States or, in some cases, to democracy itself. All of these actors exert their will on the world by building influence and exploiting the gaps. All of them are empowered by hyper-connectivity and cheap computation to coordinate, collaborate, and influence at all scales.

This is an age of hypermedia and hyper-politics. There are almost 3 billion internet users, globally. There are over 5 billion mobile subscribers – this is 77% percent of humanity. Last year, in 2010, over 6.9 trillion text messages were sent & received. Humanity has global, instantaneous communication; immediate amplification of emotion, ideology, witnessing, discovery, innovation, and iteration. We are sharing what works and what doesn’t in all domains and endeavors. Everyone is being lifted by this rising technological tide. Small-scale power is amplifying exponentially through ubiquitous computation and mobile communication. Power is re-distributing across the globalized, hyper-connected landscape in such a way that a small, minimally-funded group can generate exponential disruptions. In a mediated world, we see a new war of narratives competing for mindshare across hypermedia, cultivating borderless affinities and ideologies, and offering a global voice to disenfranchised and exploited groups. Top-down governance, unable to extend control so far over such large-scale discontinuities, is yielding space to flattened hierarchies and self-governance. All institutions are being forced to evolve and adapt to this new landscape, as all efforts to suppress it will inevitably fail and only drive more turbulence.

Complexity is an expression of information, and hypermedia is a complexity feedback loop of revealing, sharing, and iterating. Hypermedia, in all it’s varied forms, is injecting unprecedented amounts of information into our awareness. This widening perception of complexity drives behavioral uncertainty as people and institutions feel increasingly overwhelmed and lost in the noise. The world wide web has driven massive discontinuities into almost every business model, organization, and political objective. Mobile telephony coupled to social networks has given voice to the real-time status of the majority of people on the planet. In this maelstrom of asymmetrical disruption, chaos appears to be the new norm though this will likely reveal itself to be the turmoil attending a broad shift towards a new order of stability.

Complex systems across many scales have moved into a late conservation phase and are beginning to release their organizational capacity. Legacy institutions have grown far too optimized and narrow to absorb the turbulence unleashed by globalization, ubicomp, and mobile telephony. Systems have destabilized in order to make the phase change into whatever next basin of stability awaits. Governance is necessarily challenged and states will inevitably give some degree of power & influence as capital flows out of the West; as more empowered actors take the global stage; as non-local relationships shift affiliation and allegiance; as borders are antiquated by the internet and the cell phone; and as over-extended unions fracture and balkanize. Centralized control structures are not adequate to manage such large scales of nested and inter-dependent complex adaptive systems. But fortunately, the same drivers that have introduced so much discontinuity and have challenged governance as we know it are helping construct the new forms of distributed, participatory governance. Hyper-connectivity, hyper-visibility, and hyper-empowerment are driving a global peer review of legacy institutions in a patchwork attempt to define Civilization 2.0. The process is turbulent and the future is cloudy but we’ll likely land on solid ground eventually.